Big Book gears up for a turnaround

Spiegel revamps catalog to appeal to new consumers

After 10 months of bankruptcy protection, Spiegel Inc. is overhauling its struggling 99-year-old home and apparel catalog.

The Big Book's rebirth will be backed by TV ads for the first time in a decade and aided by a dream team of advisers that includes model Lauren Hutton.

The revamped 400-page catalog, which features spring 2004 merchandise, will be mailed to more than 3 million consumers starting this week. While that pales in comparison to the 10 million families who got the catalog in 1926, it is up from the 2 million who received the fall 2003 catalog.

"This whole repositioning is gearing us towards a turnaround for Spiegel catalog," said Geralynn Madonna, appointed CEO of the catalog unit last March. Spiegel doesn't break out sales of its various catalogs, but the company acknowledges that revenues generated by its flagship book have been dropping since 2000.

Lower demand and falling circulation led to a 42 percent drop in the company's overall catalog and Internet sales in December, compared with the same month in the previous year.

The Downers Grove-based retailer, which also owns the Eddie Bauer stores and the Newport News catalog, collapsed into bankruptcy last March after executives pumped up sales by giving shoppers easier access to credit.

In the 10 months since, Spiegel has cut jobs, changed management and auditors, and closed everything from 14 percent of its Eddie Bauer stores to a customer service center. Spiegel has nearly $1.5 billion in debts, owed mostly to large U.S. and German banks.

A plan of reorganization--a road map for where the company wants to go after bankruptcy and how it plans to pay creditors--is scheduled to be filed next month, though Spiegel is likely to request an extension.

Today Spiegel has $350 million in financing available to run the business but hasn't needed to tap it yet. "We have strong liquidity," spokeswoman Debbie Koopman said.

Spending on the new catalog didn't need bankruptcy court approval.

As part of the launch, the 139-year-old company will spend nearly $5 million on print, Internet, direct mail and television advertising.

The 60-second spots, created by Badger & Kry in New York, have the tag "Get Smart, Get Spiegel," and will appear for four weeks on cable channels such as Lifetime, Oxygen, Court TV and the Game Show Network.

The magazine-like book goes beyond pretty pictures to include practical advice. Celebrity fashion expert Wayne Scot Lukas, of TV's "What Not to Wear," for example, spells out how even the most harried schlumps can transform 10 classic pieces into different outfits.

The new-school catalog blurs the line between catalogs and magazines, just as magazine insurgents Lucky and Home successfully borrow from catalogs.

"It's the ultimate idea resource for busy women," said Madonna, former president of Newport News.

But one catalog expert believes that Spiegel's general merchandise catalog still has its work cut out for it.

Comparison shopping easier

"The catalogs doing well now tend to be smaller specialty books, with merchandise you can't get anywhere else," said Melissa Dowling, executive editor of Catalog Age, a trade publication. Much of Spiegel's stuff "can be found at the mall," she said.

In addition, the Internet makes it easier to comparison shop. So when shipping is factored in, a trip to a store might be cheaper. "It's even that much harder for general merchandise catalogs," Dowling said.

Spiegel says its catalog offers exclusive clothing lines and accessories from boutiques. One of the two boutiques featured in the new catalog is Lille in Chicago.

The Spiegel catalog will also feature a catalog-within-a-catalog from fruit provider Harry & David and also has tie-ins, for the first time, with Lobster Gram, Sephora, Royal Caribbean, Servicemaster and Women & Co.

Spiegel's new dream team includes Hutton, who advises on classic style and dressing one's age.

Other experts offer advice on recipes, cookware, wine, home products and decorating.

Also new in this catalog is the Spiegel Color System. "The red for a skirt is the same red for a T-shirt," Madonna said.

Creditors are `encouraged'

As far as Spiegel's unsecured creditors are concerned, more black would be better.

"We're encouraged by the new book," said Howard Seife, a Chadbourne & Parke lawyer representing the unsecured creditors' committee, citing the use of some "hot New York designers."

"But we'll see what the response rate is."

In catalog lingo, a response rate is the percentage of people who receive a catalog and end up buying something.